Spear Point Invests $1 Million into Salon Media Group
Four board members step down as TheStreet.com investor gains a 29 percent stake in the digital magazine.
Spear Point Capital Management has invested $1 million into Salon Media Group. The deal, which closed last Friday, gives the public-equity firm 29 percent of the common stock for the 22-year-old publicly held web magazine.
Spear Point isn’t new to the media game. The activist hedge fund, which invests primarily in publicly traded companies with less than $2.0 billion in market capitalization, holds about 5 percent stake in TheStreet.com, according to New York Post.
Along with the investment come three new board members — Spear Point managing partners Ron Bienvenu and Trevor Colhoun, and Dick MacWilliams, who will serve as chairman.
George Hirsch, John Warnock, James Rosenfield, and Deepak Desai are all retiring from the Salon board, a spokesperson tells Folio:. This leaves only CEO Jordan Hoffner, and director William Hambrecht, from the previous board.
In addition, Salon Media will change its capital structure. This includes the addition of a series of preferred stock, as well as an increase in the number of common stock.
This investment comes less than a year after Hoffner was instated as CEO by the board of directors, replacing Cindy Jeffers.
In a late 2016 interview, Hoffner told Folio: that he had eliminated direct sales at the publication in favor of programmatic advertising.
“This is an opportunity for me to rethink something and take the lead on it,” Hoffner told Folio:. “I’m also in an interesting situation, where I am not venture backed. We’re publicly traded; I have to show profits. For better or worse, this is the plan that seems to make sense given my situation.”
If Salon’s recent earning reports are any indication, Hoffner has a long road ahead. Q2 FY 2017 saw revenues down 41 percent from the same three-month period in 2015. Operating expenses were down too — posted at $1.8 million from $2.2 million for the same period last year. But losses were posted at $0.9 million, up 180 percent YoY.